U.S. Stocks Show Substantial Rebound After Steep Drop In Early Trading

Stocks have shown a substantial turnaround over the course of the trading session on Thursday, recovering strongly after an early sell-off. The major averages have bounced well off their early lows and firmly into positive territory.

Currently, the major averages are off their highs of the session but still posting strong gains. The Dow is up 665.32 points or 2.3 percent at 29,876.17, the Nasdaq is up 149.48 points or 1.4 percent at 10,566.58 and the S&P 500 is up 67.56 points or 1.9 percent at 3,644.59.

The turnaround on Wall Street comes as some traders have looked to pick up stocks at reduced levels following the early weakness, which dragged the major averages down to their lowest intraday levels since 2020.

Traders may also feel concerns about higher interest rates have already been priced into the markets following the recent downward trend.

The early sell-off on Wall Street came following the release of the Labor Department’s highly anticipated report on consumer price inflation in the month of September.

The report showed consumer prices rose by more than expected in September, leading to a spike in treasury yields and ongoing concerns about the outlook for interest rates.

The Labor Department said its consumer price index rose by 0.4 percent in September after inching up by 0.1 percent in August. Economists had expected consumer prices to edge up by 0.2 percent.

Excluding food and energy prices, core consumer prices climbed by 0.6 percent for the second month compared to expectations for a 0.5 percent advance.

The report also showed the annual rate of growth by consumer prices slowed to 8.2 percent in September from 8.3 percent in August, although the annual rate of growth by core prices accelerated to a 40-year high of 6.6 percent from 6.3 percent.

“The disappointingly broad-based and high inflation readings will keep the Fed in an aggressive tightening mode and on course for at least another 125bps this year,” said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.

Sector News

Banking stocks have moved sharply higher over the course of the session, driving the KBW Bank Index up by 4.6 percent. The index has shown a substantial rebound after hitting its lowest intraday level in almost two years in early trading.

A surge by the price of crude oil is also contributing to significant strength among energy stocks, with crude for November delivery jumping $1.92 to $89.19 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index is up by 4.1 percent and the Philadelphia Oil Service Index is up by 3.6 percent.

Considerable strength has also emerged among chemical stocks, as reflected by the 3.1 percent spike by the S&P Chemical Sector Index. The index has also bounced off a nearly two-month intraday low.

Computer hardware, Steel and semiconductor stocks have also shown strong moves to the upside, while notable weakness remains visible among gold stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.6 percent, while Hong Kong’s Hang Seng Index tumbled by 1.9 percent.

Meanwhile, the major European markets moved to the upside over the course of the session. While the German DAX Index surged by 1.5 percent, the French CAC 40 Index jumped by 1.0 percent and the U.K.’s FTSE 100 Index rose by 0.4 percent.

In the bond market, treasuries have climbed well off their lows of the session but remain firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5 basis points at 3.952 percent after reaching high of 4.080 percent.

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